Question: Provide a step by step solution to the following problem. To solve supply and demand problems do the following, in the order stated: Identify the

Provide a step by step solution to the following problem.

To solve supply and demand problems do the following, in the order stated:

  1. Identify the determinant* change
  2. Shift the appropriate curve in the correct direction
  3. Change price appropriately
  4. Move along the other curve (the one that did not shift) in response to the price change.

QUESTION: Assume that the case is one of the machine tool industry in a closed economy.The market begins in equilibrium.The government imposes 10% VAT tax on all producers of machine tools. Provide a step-by-step explanation of the changes in the machine tool market as a result of the tax.

Remember that the order of events is important.Also use correct terminology.

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